Nigeria Slips Into Recession, FG Attempts To Allay Concerns

It’s official: The Nigerian economy is in recession. The National Bureau of Statistics (NBS) yesterday [Aug 31] confirmed the public’s worst fears that the delayed response by the Muhammadu Buhari administration to the structural adjustments needed to avert an economic crisis has resulted in a contraction of the gross domestic product (GDP) growth rate of 2.06 per cent in the second quarter of 2016.

But instead of admitting that it had taken a number of missteps that could have averted the worst economic contraction in 29 years, the presidency and Ministry of Budget and National Planning attempted to put a spin on the damning economic data released by the NBS and engaged in a game of one-upmanship with the International Monetary Fund (IMF), assuring Nigerians that the economy will beat the fund’s gloomy forecast of -1.8 per cent for the year.

Nigeria officially slipped into a recession based on NBS’ GDP growth figures for Q2 2016, which showed that the economy contracted by 2.06 per cent, compared to the negative growth of 0.36 per cent recorded in Q1 2016. Also, the increase in food prices and imported items pushed up the Consumer Price Index (CPI), which measures inflation, to 17.1 per cent in July, from 16.5 per cent in the month of June.

National unemployment rate also rose to 13.3 per cent in Q2 from 12.1 in Q1 2016, 10.4 per cent in Q4 2015, 9.9 per cent in Q3 2015, and from 8.2 per cent in Q2 2015. However, labour productivity increased by 5.3 per cent to N637.5 in Q2 2016, from N605.27 in the previous quarter, the NBS stated Wednesday.

According to the statistical agency, Q2 GDP declined by -2.06 per cent year-on-year in real terms, lower by 1.70 per cent from the growth rate of –0.36 per cent recorded in the preceding quarter, and also lower by 4.41 per cent compared to 2.35 per cent recorded in the corresponding quarter of 2015.

Quarter-on-quarter, real GDP increased by 0.82 per cent. But in normal terms, the GDP in Q2 stood at N23.48 trillion at basic prices, 2.73 per cent higher than estimates in Q2 2015 of N22.85 trillion and lower than the rate recorded in Q2 2015 by 2.44 per cent.

Daily oil production was estimated at 1.69 million barrels per day (mbpd), representing 0.42mbpd lower than Q1 production of 2.11mbpd and also lower than the corresponding quarter in 2015 by 0.36mbpd when output was recorded at 2.05mbpd.